GST Implication in case of transfer of business by Prop. to LLP

[ROHIT GOEL]

Dear sir,

One of our clients is transitioning their business from a proprietorship to LLP. Since they are engaged in software exports, they usually work on advance basis and therefore have certain outstanding advances pending for billing. Further, they also have certain overseas debtors against which export was made earlier.

Now GST Law only allows exemption from GST in case of business transfer if done on going concern basis i.e as is where is basis. However, bank would not allow exports against advances being made by LLP and neither allow receipt of exports proceeds of proprietorship by LLP.

IN such scenario if these debtors or advances are not transferred, would it still qualify for GST Exemption?

AI Summary

Business Transition to LLP: GST Exemption Not Applicable Without Full Transfer of Assets and Liabilities A client is transitioning their business from a proprietorship to an LLP, primarily engaged in software exports. They have outstanding advances and overseas debtors. The GST law allows exemption from GST in business transfers only if done on a going concern basis, including both assets and liabilities. However, banks do not permit exports against advances or receipt of export proceeds by the LLP. The query seeks clarification on whether the GST exemption applies if debtors or advances are not transferred. The response indicates that without transferring all assets and liabilities, the exemption would not apply, and GST would be applicable.